Did Holly get transferred because David Wallace was jealous of her and Michael?

I don't think that is really what happened.

So did David really not fire him because he respects him or did he feel guilty for letting his jealousy dictate a professional decision?

I'm going with neither. He felt guilty because Michael was clearly torn up about his relationship ending, and David Wallace knew that was his fault.

David Wallace had a wife and at least one kid; and didn't seem to show any signs of being attracted to Holly. The concerned look he gave at the Crime Aid auction was because he didn't expect to see his HR representative in a relationship with the office manager.

It's a huge conflict of interest. HR is there to protect the company, but Holly would also be motivated to protect Michael, so the company had to move Holly to make sure she wouldn't be put in a position to put Michael over the company or vice-versa.

Michael was a weird; but generally nice guy. David probably just felt bad because he had to dampen Michael's happiness for the sake of the company. It doesn't really add anything significant to the narrative to have David attracted to Holly, if anything it would be a strange addition IMO.

I got the impression that David Wallace was upset for reasons other than professional impropriety when he found out about Michael and Holly. His mannerisms on camera came across to me as the slighted boy who had a crush on the girl and found out she is dating someone else.

You are adding your own interpretation into the mix.

Corporately speaking, Holly is the police that is intended to keep the employees in check. When Michael says that "Toby is not part of the family", he is in fact correct in the sense that Toby's is expected to be loyal to corporate over the people he works next to.

Imagine if the only sheriff in town is married to a possible drug dealer. This would immediately raise suspicions whether the sherriff is actively helping the drug dealer get away with their criminal undertaking.

The same is true of Michael and Holly. If Holly is in a relationship with Michael, that immediately compromises how much David Wallace can rely on Holly's reports. Keep in mind that Michael is the main reason most HR reports get filed in the Scranton branch (Toby mentions this in an earlier episode).

I think you're reading the wrong thing into it because David remains quiet and doesn't make a scene.

In actual scenes where someone sees their crush kiss someone else, the person stays quiet to not make a scene (and possibly still hide the fact that they have a crush on the other person).

However, David is remains quiet as a matter of professionalism.

Secondly, Holly moving to the Nashua branch actually enables her relationship with Michael, in the sense that it's no longer a corporate liability. The unfortunate fact is that she had to move, but from an administrative point of view, you can argue that Wallace effectively chose to enable Holly and Michael having a relationship (without consequences to the company), rather than prevent it.